Investor Relations, Earnings Quality, and Meeting Expectations

Posted: 27 Sep 2014

See all articles by Marcus Kirk

Marcus Kirk

University of Florida - Fisher School of Accounting

Date Written: September 25, 2014

Abstract

Despite the prevalence of IR among firms and its role as the functional area dedicated to financial communications, we know little about the relationship between IR and financial reporting quality. This paper examines the earnings management choices of firms with a professional IR presence. I find that these IR firms are associated with less earnings management behavior both broadly and around the earnings objective of meeting analyst expectations. Although IR firms are more likely to meet analyst expectations, I find that IR firms rely more on expectations management and less on upward earnings management. Collectively, the results imply that firms with professional IR may be better positioned to manage capital market pressures without compromising financial reporting quality.

Keywords: Investor relations, financial reporting quality, earnings management, expectations management, meeting analyst expectations

JEL Classification: D82, G10, M40, M41

Suggested Citation

Kirk, Marcus, Investor Relations, Earnings Quality, and Meeting Expectations (September 25, 2014). Available at SSRN: https://ssrn.com/abstract=2501788

Marcus Kirk (Contact Author)

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States
352-273-0222 (Phone)

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